Achieved sign-off on first VERTEX™ system for display cover panel;
received order on second system from a new Tier 1 customer

Achieved sign-off on first MATRIX™ PVD system for solar; received
order on second system from a new Tier 1 customer

Passed key milestones of joint development program and received first
MATRIX implant order from Tier 1 solar customer

Multiple contract awards in Photonics, and $25 million funding vehicle
in place for next-generation sensor development

Upgrades, spares and services for the hard disk drive industry up over
130% from 2014

Executed $18.5 million in stock repurchases, bringing the cumulative
total to $28.5 million at year-end out of a $30 million plan

“2015 was a year of execution on our strategic growth initiatives; and
we made significant progress on all fronts,” commented Wendell Blonigan,
president and chief executive officer of Intevac. “We won new Tier 1
customers in our growth markets for our Thin-Film Equipment business, we
increased the program opportunity pipeline for Photonics, and raised
revenue guidance each quarter based upon significant strengthening of
upgrade business with our hard disk drive customers. We accomplished all
this while demonstrating a disciplined approach to capital management
and reducing R&D and SG&A expenses by 5% compared to 2014. We limited
the decline in cash, restricted cash and investments, net of stock
repurchases, to $3.5 million for the full year, well below our $5
million goal. As we enter 2016, we expect revenues for the year to be
weighted toward the second half, as we continue to execute on our
Thin-Film Equipment growth strategy. Based on our customers’ current
factory build-out plans, continued traction and follow-on system orders
will help us achieve our 2016 objective to be cash flow positive from
operations.”

($ Millions, except per share amounts)

Q4 2015

Q4 2014

Non-GAAP

GAAP Results

Results

GAAP Results

Non-GAAP Results

Net Revenues

$

16.4

$

16.4

$

19.1

$

19.1

Operating Loss

$

(2.3

)

$

(2.2

)

$

(5.3

)

$

(5.6

)

Net Loss

$

(2.5

)

$

(2.4

)

$

(14.4

)

$

(5.2

)

Net Loss per Share

$

(0.12

)

$

(0.12

)

$

(0.62

)

$

(0.23

)

Year Ended

Year Ended

January 2, 2016

January 3, 2015

Non-GAAP

GAAP Results

Results

GAAP Results

Non-GAAP Results

Net Revenues

$

75.2

$

75.2

$

65.6

$

65.6

Operating Loss

$

(8.7

)

$

(8.8

)

$

(19.4

)

$

(19.3

)

Net Loss

$

(9.2

)

$

(9.3

)

$

(27.4

)

$

(18.0

)

Net Loss per Share

$

(0.41

)

$

(0.42

)

$

(1.16

)

$

(0.76

)

Intevac’s non-GAAP adjusted results exclude the impact of the
following, where applicable: (1) changes in fair value of
contingent consideration liabilities associated with business
combinations; (2) restructuring charges and (3) deferred tax asset
valuation allowance. A reconciliation of the GAAP and non-GAAP
adjusted results is provided in the financial table included in
this release. See also “Use of Non-GAAP Financial Measures”
section.

Fourth Quarter Fiscal 2015 Summary

The net loss for the quarter was $2.5 million, or $0.12 per diluted
share. This compares to a net loss of $14.4 million, or $0.62 per
diluted share, in the fourth quarter of 2014. The non-GAAP net loss was
$2.4 million, or $0.12 per share, compared to a non-GAAP net loss
$5.2 million, or $0.23 per share, for the fourth quarter of 2014.

Revenues were $16.4 million, including $8.3 million of Thin-film
Equipment revenues and Photonics revenues of $8.1 million. Thin-film
Equipment revenues consisted of upgrades, spares and service. Photonics
revenues included $1.4 million of research and development contracts. In
the fourth quarter of 2014, revenues were $19.1 million, including
$9.1 million of Thin-film Equipment revenues and Photonics revenues of
$10.0 million, which included $2.3 million of research and development
contracts.

Thin-film Equipment gross margin was 41.8% compared to (20.1)% in the
fourth quarter of 2014 and 17.8% in the third quarter of 2015. The
improvement from the fourth quarter of 2014 and the third quarter of
2015 reflected a higher mix of higher-margin upgrades and improved
factory absorption. Thin-film Equipment gross margin in the fourth
quarter of 2014 reflected a $3.1 million reserve against certain solar
implant inventory, equivalent to 34.3 percentage points of margin.
Thin-film Equipment gross margin in the third quarter of 2015 reflected
the lower margin on the first MATRIX PVD system for solar panels.

Photonics gross margin was 39.6% compared to 44.4% in the fourth quarter
of 2014 and 35.5% in the third quarter of 2015. The decline from the
fourth quarter of 2014 was due to lower margins on technology
development contracts and higher factory overhead due to the modified
cost structure implemented in the second quarter of 2015. The
improvement from the third quarter of 2015 was primarily due to improved
sensor yields, offset in part by lower margins on technology development
contracts. Consolidated gross margin was 40.7%, compared to 13.6% in the
fourth quarter of 2014 and 26.7% in the third quarter of 2015.

R&D and SG&A expenses were $8.9 million, compared to $8.2 million in the
fourth quarter of 2014 and $8.8 million in the third quarter of 2015.

Order backlog totaled $51.2 million on January 2, 2016, compared to
$52.8 million on October 3, 2015 and $48.4 million on January 3, 2015.
Backlog at January 2, 2016 and October 3, 2015 included three solar
systems and one PVD display cover glass coating system. Backlog as of
January 3, 2015 included one 200 Lean system, two solar systems and one
PVD display cover glass coating system.

The company ended the year with $48.4 million of total cash, restricted
cash and investments and $72.9 million in tangible book value.

The company repurchased 1.5 million shares of common stock for a total
of $7.6 million during the fourth quarter. As of January 2, 2016 the
company has repurchased 4.8 million shares for $28.5 million out of the
$30 million plan announced in November of 2013.

Fiscal Year 2015 Summary

The net loss was $9.2 million, or $0.41 per share, compared to a net
loss of $27.4 million, or $1.16 per share, for fiscal 2014. The non-GAAP
net loss was $9.3 million or $0.42 per share, compared to the non-GAAP
net loss of $18.0 million or $0.76 per share for fiscal 2014.

Revenues were $75.2 million, including $39.6 million of Thin-film
Equipment revenues and Photonics revenues of $35.5 million, compared to
revenues of $65.6 million, including $25.3 million of Thin-film
Equipment revenues and Photonics revenues of $40.3 million for 2014.

Thin-film Equipment gross margin was 32.4%, compared to 0.7% in 2014.
The improvement from 2014 reflected a higher level of revenue and
improved factory absorption. Thin-film Equipment gross margin in 2014
reflected a $3.1 million reserve against certain solar implant
inventory, equivalent to 12.3 percentage points of margin. Photonics
gross margin was 37.9% compared to 42.9% in 2014, reflecting lower
contractual pricing on Apache camera shipments and higher factory
overhead due to the modified cost structure implemented in the second
quarter of 2015. Consolidated gross margin was 35.0% compared to 26.6%
in 2014.

R&D and SG&A expenses were $35.3 million compared to $37.0 million in
2014. Total operating expenses were $35.1 million compared to
$36.8 million in 2014.

The company repurchased 3.4 million shares of common stock for a total
of $18.5 million during fiscal 2015.

Use of Non-GAAP Financial Measures

Intevac's non-GAAP results exclude the impact of the following, where
applicable: (1) changes in fair value of contingent consideration
liabilities associated with business combinations; (2) restructuring
charges and (3) deferred tax asset valuation allowance. A reconciliation
of the GAAP and non-GAAP results is provided in the financial tables
included in this release.

Management uses non-GAAP results to evaluate the company’s operating and
financial performance in light of business objectives and for planning
purposes. These measures are not in accordance with GAAP and may differ
from non-GAAP methods of accounting and reporting used by other
companies. Intevac believes these measures enhance investors’ ability to
review the company’s business from the same perspective as the company’s
management and facilitate comparisons of this period’s results with
prior periods. The presentation of this additional information should
not be considered a substitute for results prepared in accordance with
GAAP.

Conference Call Information

The company will discuss its financial results and outlook in a
conference call today at 1:30 p.m. PST (4:30 p.m. EST). To participate
in the teleconference, please call toll-free (877) 334-0811 prior to the
start time. For international callers, the dial-in number is
(408) 427-3734. You may also listen live via the Internet at the
company's website, www.intevac.com,
under the Investors link, or at www.earnings.com.
For those unable to attend, these web sites will host an archive of the
call. Additionally, a telephone replay of the call will be available for
48 hours beginning today at 7:30 p.m. EST. You may access the replay by
calling (855) 859-2056 or, for international callers, (404) 537-3406,
and providing Replay Passcode 19123979.

About Intevac

Intevac was founded in 1991 and has two businesses: Thin-Film Equipment
and Photonics.

In our Thin-Film Equipment business, we are a leader in the design and
development of high-productivity, thin-film processing systems. Our
production-proven platforms are designed for high-volume manufacturing
of substrates with precise thin film properties, such as the hard drive
media, display cover panel, and solar photovoltaic markets we serve
currently.

In our Photonics business, we are a recognized leading developer of
advanced high-sensitivity digital sensors, cameras and systems that
primarily serve the defense industry. We are the provider of integrated
digital imaging systems for most U.S. military night vision programs.

For more information call 408-986-9888, or visit the company's website
at www.intevac.com.

200 Lean®is a registered trademark and INTEVAC
MATRIX™ and INTEVAC VERTEX™ are trademarks of Intevac, Inc.

Safe Harbor Statement

This press release includes statements that constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 (the “Reform Act”). Intevac claims the protection of
the safe-harbor for forward-looking statements contained in the Reform
Act. These forward-looking statements are often characterized by the
terms “may,” “believes,“ “projects,” “expects,” or “anticipates,” and do
not reflect historical facts. Specific forward-looking statements
contained in this press release include, but are not limited to: the
ability to leverage technology into new markets, customer penetration
and adoption, and future revenue growth and profitability. The
forward-looking statements contained herein involve risks and
uncertainties that could cause actual results to differ materially from
the company’s expectations. These risks include, but are not limited to:
technology risk and challenges achieving customer adoption and
commercial success in adjacent markets and delays in shipping deposition
systems or Photonics cameras, each of which could have a material impact
on our business, our financial results, and the company's stock price.
These risks and other factors are detailed in the company’s periodic
filings with the U.S. Securities and Exchange Commission.

INTEVAC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except percentages and per share amounts)

Three months ended

Year ended

January 2,

January 3,

January 2,

January 3,

2016

2015

2016

2015

Net revenues

Thin-film Equipment

$

8,308

$

9,106

$

39,622

$

25,290

Photonics

8,090

9,956

35,538

40,260

Total net revenues

16,398

19,062

75,160

65,550

Gross profit

6,677

2,596

26,317

17,433

Gross margin

Thin-film Equipment

41.8

%

(20.1

)%

32.4

%

0.7

%

Photonics

39.6

%

44.4

%

37.9

%

42.9

%

Consolidated

40.7

%

13.6

%

35.0

%

26.6

%

Operating expenses

Research and development

4,150

3,015

15,661

15,832

Selling, general and administrative

4,723

5,150

19,638

21,205

Acquisition-related1

106

(269

)

(244

)

(250

)

Total operating expenses

8,979

7,896

35,055

36,787

Total operating loss

(2,302

)

(5,300

)

(8,738

)

(19,354

)

Operating income (loss)

Thin-film Equipment

(2,119

)

(6,327

)

(9,345

)

(22,008

)

Photonics

1,146

2,336

5,206

8,932

Corporate

(1,329

)

(1,309

)

(4,599

)

(6,278

)

Total operating loss

(2,302

)

(5,300

)

(8,738

)

(19,354

)

Interest income and other income (expense), net

39

32

127

337

Loss before income taxes

(2,263

)

(5,268

)

(8,611

)

(19,017

)

Provision for income taxes

263

9,090

555

8,428

Net loss

$

(2,526

)

$

(14,358

)

$

(9,166

)

$

(27,445

)

Loss per share

Basic and Diluted

$

(0.12

)

$

(0.62

)

$

(0.41

)

$

(1.16

)

Weighted average common shares outstanding

Basic and Diluted

21,010

23,243

22,218

23,671

1Amounts for all periods presented include changes in
fair value of contingent consideration obligations associated with
the Solar Implant Technology (SIT) acquisition in 2010.

INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

January 2,

January 3,

2016

2015

(Unaudited)

(see Note)

ASSETS

Current assets

Cash, cash equivalents and short-term investments

$

36,954

$

51,080

Accounts receivable, net

12,310

12,087

Inventories

18,760

19,212

Prepaid expenses and other current assets

1,712

1,727

Total current assets

69,736

84,106

Long-term investments

9,673

17,542

Restricted cash

1,780

1,780

Property, plant and equipment, net

11,921

12,826

Intangible assets, net

3,112

3,966

Deferred income tax and other long-term assets

1,459

55

Total assets

$

97,681

$

120,275

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

5,950

$

4,640

Accrued payroll and related liabilities

4,066

3,977

Other accrued liabilities

5,632

8,277

Customer advances

3,625

2,551

Total current liabilities

19,273

19,445

Other long-term liabilities

2,411

2,200

Stockholders’ equity

Common stock ($0.001 par value)

20

23

Additional paid-in capital

166,514

161,271

Treasury stock, at cost

(28,489

)

(9,989

)

Accumulated other comprehensive income

412

619

Accumulated deficit

(62,460

)

(53,294

)

Total stockholders’ equity

75,997

98,630

Total liabilities and stockholders’ equity

$

97,681

$

120,275

Note: Amounts as of January 3, 2015 are derived from the
January 3, 2015 audited consolidated financial statements.

INTEVAC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited, in thousands, except per share amounts)

Three months ended

Year ended

January 2,

January 3,

January 6,

January 3,

2016

2015

2016

2015

Non-GAAP Loss from Operations

Reported operating loss (GAAP basis)

$

(2,302

)

$

(5,300

)

$

(8,738

)

$

(19,354

)

Change in fair value of contingent consideration obligations1

106

(269

)

(244

)

(250

)

Restructuring charges2

—

—

148

288

Non-GAAP Operating Loss

$

(2,196

)

$

(5,569

)

$

(8,834

)

$

(19,316

)

Non-GAAP Net Loss

Reported net loss (GAAP basis)

$

(2,526

)

$

(14,358

)

$

(9,166

)

$

(27,445

)

Change in fair value of contingent consideration obligations1

106

(269

)

(244

)

(250

)

Restructuring charges2

—

—

148

288

Valuation allowance on deferred tax assets3

—

9,394

—

9,394

Income tax effect of non-GAAP adjustments4

—

—

—

—

Non-GAAP Net Loss

$

(2,420

)

$

(5,233

)

$

(9,262

)

$

(18,013

)

Non-GAAP Loss Per Diluted Share

Reported loss per diluted share (GAAP basis)

$

(0.12

)

$

(0.62

)

$

(0.41

)

$

(1.16

)

Change in fair value of contingent consideration obligations1

0.01

(0.01

)

(0.01

)

(0.01

)

Restructuring charges2

—

—

0.01

0.01

Valuation allowance on deferred tax assets3

—

0.40

—

0.40

Non-GAAP Loss Per Diluted Share

$

(0.12

)

$

(0.23

)

$

(0.42

)

$

(0.76

)

Weighted average number of diluted shares

21,010

23,243

22,218

23,671

1Results for all periods presented include changes in
fair value of contingent consideration obligations associated with
the Solar Implant Technology (SIT) acquisition in 2010.

2Results for all periods presented include severance
and other employee-related costs related to various restructuring
programs.

3In accordance with ASC Topic 740, Income Taxes, the
company determined based upon an evaluation of all available
objectively verifiable evidence, including but not limited to the
company’s Singapore operations falling into a cumulative four year
loss, that a non-cash valuation allowance should be established
against its Singapore deferred tax assets which are comprised of
accumulated and unused Singapore net operating losses and other
temporary book-tax differences. The establishment of a non-cash
valuation allowance on the company’s Singapore deferred tax assets
does not have any impact on its cash, nor does such an allowance
preclude the company from utilizing its tax losses or other
deferred tax assets in future periods.

4The amount represents the estimated income tax effect
of the non-GAAP adjustments. The company calculated the tax effect
of non-GAAP adjustments by applying an applicable estimated
jurisdictional tax rate to each specific non- GAAP item.

Contacts

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